Delicious Foods Corporation

Delicious Foods Corporation

Abstract

The Delicious Foods Corporation produces and markets nutritional health bars and appears to be enjoying a period of sustained growth. Although the growth should continue for the foreseeable future, there are actions that management can and should take to improve company performance.

Risk and performance for the possible courses of action are compared and contrasted to enable management to make the best possible decision toward actions that maximize success.

The Delicious Foods Corporation produces and markets nutritional health bars and appears to be experiencing a period of sustained growth. The success of the company’s short term future is contingent on several key decisions on how to proceed regarding existing constraints. Opportunities to enhance current demand for marketed products and to invest in increased manufacturing capability are present agenda items. The company can employ one or more of the proposed courses of action or opt to maintain the status quo. To enhance decision making ability, the general manager has made estimates that reasonably predict demand and cost figures over the next five months.

Next month the Delicious Foods Corporation expects to sell 600,000 nutrition bars. Growth through May has sales estimated to increase by 2.5% per month. This growth is expected to remain constant despite a planned increase in price for the product. The net result to operating income of the combined growth in demand and sales price will enhance profit however the company will be met with production constraints to meet maximum potential within this planning period.

Currently, the Delicious Foods Corporation is only able to produce 640,000 bars per month. Because of this limited manufacturing capability the company will not be able to reach their full potential if the current estimates are realized. There is a course of action option available to expand current manufacturing facilities at...